A thoughtful woman (Photo: Thinkstock)

A woman who works full time from age 25 to 65 would have to work another 4.2 years to match the income of a man who retired as 65.

That’s just one of many findings in a new report from the Goldman Sachs Global Markets Institute, “Closing the Gender Gaps: Advancing women in Corporate America,” that advisors working with female clients may want to keep in mind. They may also want to consider the pay structure in their own firm.

Women likely will not only have less money to invest and save during their working lives, but they will also end up with a smaller nest egg even if they work longer because they will lose the benefit of some compounded gains.

Goldman Sachs reports that women on average earn about 20% less than men in an equivalent job, according to the Census Bureau, and just 2.5% of that difference can be explained by measurable factors such as job characteristics that that are captured in labor-market studies.

Part of the unexplained gap — the 17.5% — may be due to the lack of women in highly paid senior roles, according to the Goldman report. It cites The Council of Economic Advisers, which found that women in the U.S. on average make up 56% of workers in the 20 lowest-paid occupations, but only 29% of workers in the 20 highest-paid occupations.

The financial services industry, along with health care, stands out for the relative shortage of female managers compared to female workers. About 40% of the industry’s managers are women versus about 55% of its employees.

But even a greater percentage of female high earners may not come close to filling the salary gap between men and women because that gap is actually greatest for women earning top dollar than for women earning less.

“The wage gap among high earners — meaning among women and men in the 90th percentile — is the widest and has shown the least progress relative to the level in 1976,” the report notes.

The Goldman report examines two prevalent reasons for the women’s wage gap: “downshifting” to jobs that require less time and travel and may include flexible hours, noting that this change is not always voluntary, and attrition, women leaving the workforce for personal reasons like child-rearing, although the attrition rate early in women’s careers is now far less a factor than it was years ago.

The report notes that marriage with children has the opposite effect on a woman’s career as a  man’s.

“Being married and having children are characteristics associated with higher wages for men than for women … Depending on whether you look at this analysis from the man’s point of view or from the woman’s, there is either a “fatherhood premium” or a “motherhood penalty.”

In addition, flexible employment policies that help women — and men — remain in the workforce despite family commitments can have unintended consequences, even if the flexibility doesn’t impact productivity.

“While such flexibility may lead women to stay in the workforce for longer, these benefits may also limit their professional advancement,” according to the report. “Family-friendly policies, especially those that are geared principally to women, may even discourage employers from hiring or investing in women in the first place.”

Still, women have made headway in the workforce. They comprise nearly half the labor force today and hold more than half the bachelor’s and advanced degrees even though they continue to earn less than men in comparable jobs, according to the Goldman report.

It closes with recommendations for companies to review policies and practices, including:

  • Recruiting processes, to avoid gendered job criteria and biased interviewing — whether conscious or unconscious
  • Internal compensation data and practices, to ensure that there are no gender pay gaps across comparable positions today
  • Leadership-development programs, to check for bias in the allocation and assessment of developmental assignments, and to encourage women to take on highly valued roles
  • Evaluation and promotion processes, to consider whether gender stereotypes play into definitions of success and whether women are penalized for flexible schedules or part-time work and to ensure that employee evaluations place more emphasis on ability and productivity than simply on time spent at or on work
  • Organizational structures and practices, to determine whether work can be made more flexible for women and men alike — without a negative impact on their wages or career prospects
  • Better representation of women on boards of directors
  • Programs that enable women to “upshift” after having downshifted (whether voluntarily or involuntarily) or to re-enter after having left the workforce temporarily

The report also suggests that boards clearly establish diversity as a strategic goal, develop robust metrics and strengthen internal data-gathering and analytics and that companies may also consider setting targets for the share of women on interview short lists, in promotion pools, in senior positions or in board seats.

— Related on ThinkAdvisor: